A&A APL Logistics site visit October 4, 2002

APL’s Deconsolidation Facility

Torrance, California USA

October 4, 2002

Richard Armstrong

Key Personnel:

Marold Kamai, Managing Director – Deconsolidation Services

Robin Yutuc, General Manager – Torrance Facility

Design and planning are heavily involved in this facility. It’s less than one year old and its backbone is information technology. Two programs make up the IT spine. First is APL Logistics’ Container Management System (CMS), now in its third revision. Marold Kamai is the man behind this system. He was trained in computer science, worked in operations and is now a managing director of deconsolidation services. The CMS he built allows for several days of lead time visibility to inbound containers and optimizes outbound 53 foot trailer space. Kamai is able to get an average of 1.7 FEUs on each trailer by crossdocking and reloading. In addition, significant savings are made with regard to the carrier’s container detention and repositioning charges allowing a cost savings to the deconsolidation customer. CMS is also used to consolidate export shipments.

The second key piece of IT is Manhattan’s PkMS®. This Internet enabled WMS and inventory control system is used to merge individual cartons for crossdocking and outbound shipment to U.S. locations.

CMS end-to-end matches containers to trailers by purchase order, part number, style or destination. PkMS® allows for a more granular treatment of LTL shipment reformulation.

To smooth the flow into the facility, dispatches are divided up into six hour segments. Drivers going to the ports of Los Angeles and Long Beach are communicated with by radio and cell phone to keep them moving as efficiently as possible.

The facility is 265,000 square feet with 64 dock doors. It is 120 yards wide. There are 92 trailer parking spaces and can be expanded to an additional 200 offsite. Kamai expects APL will handle about 12,500 FEUs per year through the facility.

Parcel shipments are sorted out individually and tendered on a pup trailer each day to a single carrier.

Major customers are Linen & Things (inbound), Espirit, Asics Tiger and Komodo. Espirit is a vendor receiving GOH service. Its major customer is Macys West, a Federated Company.

Asics Tiger offers a good example of how the APL deconsolidation facility operates. Asics makes shoes in China. The cartons of shoes are labeled, barcoded, read and placed in cardboard shipping cartons at the end of the production lines. The cartons are barcoded.

Cartons are tracked from shipping point to the port, then from the port in China to Los Angeles. Because of EDI feeds to CMS, APL has several days notice for each container. EDI feeds are made to PkMS® so that individual cartons can be matched up to retail store requirements. PkMS® groups cartons accordingly into store shipments. These LTL shipments are then optimized by CMS for outbound trailer movement. About 15% of Asics shoes are accumulated as inventory for future shipments. All cartons are relabeled by APL as part of the reshipment process.

Kamai is continuing to work on the design of the deconsolidation facility and the power of CMS. He expects APL Logistics to be able to optimize according to landed costs for some customers within the next year.

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